BMPs were initially isolated from bone extracts based on their ability to promote bone formation. Today these bone induction activities are sought after in several clinical applications;for example, ectopic applications of recombinant BMPs have increased to some extent the success of dental implants. The clinical applications are however limited by our poor understanding of the mechanisms for localization and concentration of BMP activities. We think that various strategies utilized by the fruit fly to ensure formation of robust/reliable BMP morphogen gradients over relatively long distances may offer exquisite solutions. The Drosophila embryo uses a gradient of Decapentaplegic (Dpp), a homologue of the vertebrate BMP-2/-4, to specify the dorsal structures. In the early embryo, dpp is transcribed uniformly throughout the dorsal domain, yet it forms an activity gradient in which only about 10% cells along the dorsal midline receive high levels of signal and specify the amnioserosa. In the pupal wing, Dpp diffuses from the longitudinal veins into the posterior crossvein competent zone and creates a corridor of peak signaling that is perpendicular to the source of morphogen. In both instances, the formation of the Dpp gradient occurs at a post-transcriptional level and involves modulation by additional secreted gene products. In the early embryo, Dpp is bound in a complex containing Short gastrulation (Sog), a BMP-binding protein secreted from the ventral lateral regions. This complex inhibits binding of Dpp to its receptors in lateral regions but, at the same time, it facilitates long-range ligand diffusion, shuttling Dpp from the lateral domain towards the midline. A critical component that helps create flux and provides directionality is the processing of Sog by Tolloid (Tld), a metalloprotease of the BMP-1 family expressed in the dorsal domain. Tld cleaves Sog when complexed with Dpp and releases the ligand. The net movement of Dpp dorsally is generated by reiterated cycles of complex formation, diffusion and destruction by Tld. Sog plays both positive and negative roles in regulating BMP activity. The negative role comes from blocking access of ligands to receptors. The positive effect comes from its ability to facilitate Dpp diffusion. Without Sog there is no net movement of Dpp dorsally, the peak signaling domain does not form, the amnioserosa is not specified, and the embryos fail to develop and die. Interestingly, Chordin, the vertebrate orthologue of Sog, can only act as an inhibitor when expressed in Drosophila and cannot promote long range Dpp signaling. At the molecular level, the difference between Sog and Chordin is that processing of Sog by Tld requires the BMP ligand as an obligatory co-substrate while Chordin does not. To determine the source of this difference, we modeled the Tld catalytic domain in Drosophila using the crystal structure of the catalytic domain of human Tld. We purified and sequenced the Sog cleavage fragments and derived a consensus cleavage recognition sequence. We used this peptide to study the enzyme-substrate interactions in Sog and compared them with Chordin sequences. From this modeling, we hypothesized that several residues at the processing site might be responsible for making one substrate dependent on BMP binding for processing while the other is not. Our working hypothesis is that Sogs ability to function in a transport process as a long range BMP agonist resides, in molecular terms, in the BMPs co-substrate requirements for Tld mediated Sog degradation. This hypothesis has been supported with computational modeling by our mathematician collaborator. Modeling indicates that the co-substrate requirement for Sog processing by Tld is critical for proper Dpp gradient formation. In computations that relax this constraint and allow for Sog degradation when not complexed with Dpp, Dpp flux towards the dorsal miidline is greatly reduced. To test this hypothesis we first generated Sog variants that are BMP-independent Tld substrates in vitro (Sog-i variants). To study their in vivo effects onto the BMP signaling we created transgenic lines that express Sog under its own endogenous enhancer. Lines expressing wild-type Sog did rescue null sog mutants or trans-heterozygous combinations (sog-/-) to full viability and fertility. In contrast, lines expressing Sog-i variants rescued only partially, and only when present as two or more copies. We then analyzed the profile of the peak BMP signaling domain, by following the activated/phosphorylated effector of the BMP signaling pathway in Drosophila (P-Mad), and the cell fate (amnioserosa cells). In wild-type embryos the P-Mad positive domain is narrow (8-10 cells diameter) and intense. In heterozygous (sog+/-) embryos the P-Mad domain is wider and reduced in relative intensity (by 30%), though it does reach the threshold required to specify amnioserosa cells. Due to the widening of their P-Mad peak domain, sog+/- heterozygous embryos have an average of 314 amnioserosa cells, significantly more than the wild-type embryos (197 cells). The amnioserosa is an extraembryonic membrane that could vary in size (150 to 350 cells) and still perform its function during morphogenetic movements. When we substituted the endogeneous sog for sog-wt transgenes, the profile of the BMP gradient as well as the cell fate were fully rescued, in a concentration dependent manner. More specifically, using several independent transgenes, we found that sog-/- bearing one copy of the sog-wt transgene ressembled sog+/- embryos, while sog-/- bearing two copies of sog-wt had wild-type-like P-Mad profile and amnioserosa. When several independent sog-i transgenes were similarly tested, we found that addition of 2 copies of sog-i in sog-/- background produced a wide, dim and irregularly shaped P-Mad domain, and amnioserosa fields of 294 cells. Our results show that several residues at the processing site are responsible for making Sog (and not Chordin) dependent on BMP binding for its processing and degradation. Mutations of these residues render Sog co-substrate independent for processing by Tld, and alter the in vivo range of the Sog-i-Dpp complexes and consequently the Dpp morphogen gradient profile. Computational modeling predicts that additional copies of sog-i may expand the range of the Sog-i-Dpp complexes and possibly rescue the Dpp gradient profile. We are now in the process of constructing and analyzing sog-/- strains bearing multiple copies of sog-i transgenes.